| The four most common types of insurance cover | | | | the insurance provider, under the understanding |
| are life insurance, health insurance, car insurance | | | | that should the car be involved in a road accident |
| and home insurance, though not in that particular | | | | (or get stolen, in the relevant types of cover), |
| order. | | | | the car insurance provider would take up liability |
| Life insurance is taken against the risk of death, | | | | for loss the accident (or theft) causes, typically to |
| which we are all at, by virtue of being alive. The | | | | a given pre-agreed extent; or upon the |
| idea behind taking life insurance cover is to ensure | | | | assessment of the loss by the assessors |
| that one's dependants don't suffer financial | | | | attached to the insurance provider. |
| distress in the event of their (the policyholder's) | | | | Home insurance, on the other hand, covers |
| death. So in the event of death - once a person | | | | against a variety of risks - from theft to fire - |
| with life insurance has been certified as having | | | | with an agreement where the policyholder pays |
| died - it falls upon the life insurance provider with | | | | the insurance provider certain sums of money |
| whom they had taken the cover to pay the | | | | called premiums on a regular basis, and with the |
| policyholders survivors (who might include | | | | understanding that in event of the home that is |
| spouses, children and other dependants) money | | | | so insured suffering from the events against |
| from the policy - whose amount is typically | | | | which it is insured, the insurance provider would |
| agreed upon at the policy-signing time. This is paid | | | | take up financial liability for the loss incurred - |
| either in lump-sum or in smaller but regular | | | | typically up to a given level. |
| amounts over a longer period of time. | | | | Now the common factor that is seen is all these |
| Health insurance on the other hand is taken | | | | types of insurance cover is 'risk.' What the |
| against the risk of 'sickness' which like the risk of | | | | insurance providers typically do, then, is to charge |
| death, is one which we are all exposed to (of | | | | those of their customers who have 'higher risk |
| course in varying degrees), by virtue of our being | | | | profiles' higher amounts of money in terms of |
| alive. So the way health insurance works is that | | | | premiums, with those of their customers who are |
| the policyholder pays sums of money called | | | | said to be at lower risk being charged lower |
| premiums to the insurance provider, under the | | | | amounts of money in terms of premiums. Herein, |
| agreement that should the policyholder fall sick, | | | | then, lies the way for one to reduce their |
| the insurance provider would foot their medical bill, | | | | insurance costs: by reducing their risk profile. By |
| typically up to a pre-agreed level and at certain | | | | adopting healthier living habits, for instance, one |
| agreed health facilities to prevent fraud. | | | | gets a way to reduce their health and life |
| Car insurance is typically taken against the risk of | | | | insurance costs, whereas by installing various |
| 'road accident,' though other risks like car theft | | | | safety features in their home or car, one would |
| might also be covered in some cases. The | | | | stand a chance to lower their home and car |
| agreement here is that the car owner continues | | | | insurance costs, respectively, by significant |
| to pay certain sums of money called premiums to | | | | margins. |